Saudi Arabia’s stock market rose sharply on Thursday as banks rallied after the Kingdom’s mammoth international bond sale, which could help to unclog liquidity bottlenecks in the economy.
Saudi Arabia’s Tadawul All-Share Index gained 2.3 percent in sharply higher turnover as all but one of the banks advanced, with Samba Financial, which earlier this week had reported a drop in third-quarter net income, jumping 5.2 percent.
The Kingdom conducted the world’s largest emerging market bond sale on Wednesday, selling $17.5 billion of debt in the government’s first international offer while attracting investor orders totalling almost four times that amount.
“This issuance is a very welcome development for the Saudi equity market and the banking sector in particular,” said Mohamed Eljamal, director of capital markets at Abu Dhabi’s Waha Capital.
“One of the main issues facing the banking sector in Saudi is the tight liquidity in the system and the high loan-to-deposit ratio — this issuance should directly help relieve some of this liquidity pressure.”
Finance Minister Ibrahim Alassaf said in a televised interview that state payments to construction firms would increase in the coming period and that delays in the payments were merely due to “technical reasons.” Eljamal said this could soften the blow to bank earnings from souring construction sector loans.
Other stock market sectors were mainly driven by quarterly earnings announcements. Real estate developer Jabal Omar, which depends heavily on government projects, jumped 6.0 percent after posting a quarterly net profit of SR691 million ($184.3 million) compared to a loss of SR127 million a year ago.
Saudi Electricity jumped 5.9 percent after its third-quarter net profit rose 50.8 percent to SR4.40 billion; NCB Capital had forecast SR1.90 billion.
Saudi Telecom rose 2.3 percent to SR54.75 after reporting quarterly profit of SR2.15 billion, down 7.5 percent year-on-year but in line with forecasts.
Alrajhi Capital said the results were “positive” and “STC continues to prove its resilience in the current tough market environment, an indication of the strength of its business compared to peers.” It kept an “overweight” rating on the stock with a target of SR70.
But Etihad Etisalat (Mobily) slumped 6.3 percent after reporting a net loss of SR167.7 million versus a loss of SR158.3 million in the year-earlier period. Analysts had forecast a profit of SR15.06 million.
Savola Group gained 2.1 percent despite reporting a 53.3 percent drop in third-quarter net profit and announcing that it would again halve its quarterly dividend.
But Rabigh Refining and Petrochemical dropped 5.4 percent after reporting a narrower net loss of SR217 million compared with a year-ago loss of 460 million riyals.

UAE MIXED, EGYPT REBOUNDS

Elsewhere, Dubai’s index closed 0.6 percent higher with DXB Entertainments rising 4.5 percent in active trade. But neighboring Abu Dhabi’s index pulled back 0.3 percent with blue chip First Gulf Bank falling 0.9 percent as investors booked profits.
In Doha, the index fell 0.1 percent. Commercial Bank , which reported a net loss earlier this week, slipped a further 1.3 percent.
Egypt’s index bounced 1.4 percent but still closed down 3.0 percent for the week.
Heliopolis Co. for Housing, which fell 0.6 percent on Wednesday after reporting a 47.9 percent drop in quarterly net profit, rebounded 8.1 percent.
Juhayna Food Industries rose 0.5 percent after reporting a 34 percent drop in third-quarter net profit; chairman Safwan Thabet told Reuters that dollar shortages and the company’s decision not to fully pass on higher import costs to the consumer were the main reasons for the decline. 
The company’s sales jumped 10.9 percent for the quarter.

Source: Arab News